The IMF WEO Report released in April 2022 provides the updated data in respect of current and projected levels of inflation. The most significant changes relate to Turkey and Ethiopia.
Hyper-inflationary economies
The IMF WEO Report shows that entities with the currency of the following countries as their functional currency should apply IAS 29 in 2022:
Ethiopia
Ethiopia’s forecast data, which was previously omitted in the October 2021 IMF WEO Report due to an unusually high degree of uncertainty, is now included. The IMF WEO Report shows that three-year cumulative inflation is expected to increase towards 113% and 131% by the end of 2022 and 2023 respectively. Local actual data (provided by the Central Statistics Agency shows that three-year cumulative inflation is 99.4% at 31 March 2022. Given the high level of inflation during 2021, entities with the currency of Ethiopia should prepare themselves to apply IAS 29 in the second half of 2022.
Turkey
The IMF WEO Report confirmed that entities with the currency of Turkey as their functional currency should start to apply IAS 29 from June 2022 onwards.
To be kept under review in 2022
The following economies are not hyper-inflationary, but they should be kept under review in 2022:
Other potentially hyper-inflationary economies (lack of reliable information)
Consistent and reliable inflation data is not available for the following countries:
Ukraine
For Ukraine, the level of inflation projections for 2022–2027 are omitted in the April 2022 IMF WEO Report due to an unusually high degree of uncertainty. Local data is provided by the National Bank of Ukraine. Entities with the currency of Ukraine as their functional currency should consider the information available at the reporting date, to consider whether IAS 29 is applicable.
Paragraph 4 of IAS 29 states that it is preferable for all entities that report in the currency of a hyper-inflationary economy to apply the standard at the same date; and the standard should be applied as if the economy had always been hyper-inflationary.
David Baur
Partner and Leader Corporate Reporting Services, PwC Switzerland
Tel: +41 58 792 26 54